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Supervalu to sell one of its retail banners

Supervalu continues to shift its emphasis from retail to its wholesale business.

The company announced plans to sell its Farm Fresh Food & Pharmacy banner. It already has entered into separate agreements to sell 21 of its 38 Farm Fresh stores for approximately $43 million in cash to three different retailers: Harris Teeter, Kroger Mid-Atlantic Division, and Food Lion. The transaction are expected to close in May 2018.

Supervalu said it is continuing to discuss transactions for the remaining Farm Fresh stores and is talking to companies and certain Farm Fresh employees about purchasing them. Supervalu acquired the banner, whose stores are in Virginia, in 1999.

"Over the past two years, we've been working diligently and rapidly to transform our business to become the wholesale supplier of choice for grocery retailers across the United States," said CEO Mark Gross.

In 2016, Supervalu sold its discount Save-A-Lot banner, which had approximately 1,350 retail locations. And in 2017, it acquired Unified Grocers and Associated Grocers of Florida, which when combined with substantial organic growth, added more than $5 billion in run rate sales to bring Supervalu’s core wholesale business to nearly $13 billion.

“Exiting the Farm Fresh banner will enable us to allocate greater resources and energy toward the strategic growth of our wholesale business,” Gross said. “We also continue to aggressively pursue other important initiatives, including the monetization of real estate through sale leaseback transactions and cost reduction across the company.”

Under the new agreements for Farm Fresh, 10 stores being sold to Harris Teeter, including six in-store pharmacies and three fuel centers; three being sold to Food Lion, including three in-store pharmacies; and eight are being sold to Kroger Mid-Atlantic Division, including eight in-store pharmacies and four fuel centers.

Supervalu serves customers through a network of 3,324 stores, composed of 3,111 wholesale primary stores operated by customers serviced by the company’s food distribution business and 213 traditional retail grocery stores operated under five retail banners in six geographic regions (store counts as of December 2, 2017).
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